Should graduates still be repaying their student loans into their 60s?

Graduates will have to repay their student loans over 40 years under plans for university funding reforms.

The proposal, which could see them paying off the debt into their 60s, comes as part of a raft of recommendations made in the Post-18 Education and Funding review.

An independent panel led by Philip Augar also proposes that the tuition fee cap should be cut to £7,500 from £9,250 a year, and that the interest rate on loans should be reduced to the level of inflation.  Interest rates are currently charged at 6.3%.

The panel further recommends the reintroduction of maintenance grants for disadvantaged students, of at least £3,000 a year.

Tuition fees in England were trebled in 2012, and the vast majority of courses now cost the maximum, £9,250 per year.

According to estimates by the Institute for Fiscal Studies (IFS), the average student can now leave university owing more than £50,000.

The loan will be wiped out after 40, not 30, years – substantially increasing the total repayment for many.

For current students, the loan is wiped after 30 years. The Augar report proposes extending that to 40 years. As most people don’t clear their loan in full within the current 30 years, extending the life of the loan means repaying for far longer, and a substantially increased total repayment.

While more people will clear the loan in full due to the new, longer repayment period (and lower tuition fees), if implemented the majority of students will need to come to terms with the fact that they will now have their income reduced by 9% for all but the tail end of their working lives.

What are your views? Do you think the repayment term should be extended? What are your views about the current interest rate on student loans charged at 6.3%